FreedomWorks - Austrian Economicshttp://www.freedomworks.org/fieldtags/austrian-economics
enThe Austrian Business Cyclehttp://www.freedomworks.org/university/lessons/austrian-business-cycle
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Peter Schiff gives insight on the business cycle, booms and busts, expansions and recessions that are baffling to many economists across the political spectrum. Most people still think that recessions occur randomly or are caused by irrational behavior by consumers. Only the Austrian School of economics has a fully-developed theory to account for the business cycle—that booms and busts are caused by government intervention in markets, sending distorted signals to investors. The resulting malinvestments are the cause of booms and busts.</p>
<p>Peter Schiff is an American economist, author, and financial commentator. A licensed stock broker, Schiff is also the president of Euro Pacific Capital, headquartered in Westport, Connecticut. He appears frequently as guest on CNBC, Fox News, and Bloomberg Television, and also hosts the popular radio show and podcast, <em>The Peter Schiff Show</em>. His most recent book is <em>The Real Crash</em>.</p>
<p><em>Sponsored by the <a href="https://www.allieded.org/" target="_target">Allied Educational Foundation</a></em></p>
</div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/fieldtags/austrian-economics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Austrian Economics</a></div><div class="field-item odd"><a href="/tag/boom-and-bust" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">boom and bust</a></div><div class="field-item even"><a href="/fieldtags/business-cycle" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Cycle</a></div><div class="field-item odd"><a href="/fieldtags/economics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Economics</a></div><div class="field-item even"><a href="/fieldtags/stimulus" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Stimulus</a></div><div class="field-item odd"><a href="/tag/fwf" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">FWF</a></div><div class="field-item even"><a href="/fieldtags/sound-money" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">sound money</a></div><div class="field-item odd"><a href="/tag/size-government" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Size of Government</a></div></div></div><div class="field field-name-field-related-core-issues field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/issue/sound-money" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sound Money</a></div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="//d7.freedomworks.org.s3.amazonaws.com/Austrian Business Cycle.png" width="509" height="305" alt="" /></div></div></div><div class="field field-name-field-course field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/university/courses/guide-economic-policy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">A Guide to Economic Policy</a></div></div></div><div class="field field-name-field-learn-more field-type-link-field field-label-above"><div class="field-label">Learn More:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="http://www.freedomworks.org/crisis" target="_blank">Roots of the Crisis: A History of the Panic of 2008</a></div><div class="field-item odd"><a href="http://mercatus.org/sites/default/files/publication/WP0923_The_Microeconomic_Foundations_of_Macroeconomic_Disorder.pdf" target="_blank">The Microfoundations of Macroeconomic Disorder: An Austrian Perspective on the Great Recession of 2008</a></div><div class="field-item even"><a href="http://www.tfas.org/page.aspx?pid=2510" target="_blank">The Roots of the Financial Crisis and the Solution</a></div></div></div><div class="field field-name-video-embed field-type-video-embed-field field-label-above"><div class="field-label">Video URL:&nbsp;</div><div class="field-items"><div class="field-item even">
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</div></div></div><div class="field field-name-field-featured-on-home field-type-list-boolean field-label-above"><div class="field-label">Featured On Home:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-featured-on-issue field-type-list-boolean field-label-above"><div class="field-label">Featured On Issue:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div>Tue, 07 Jul 2015 18:54:46 +0000pschiff2000161537 at http://www.freedomworks.orghttp://www.freedomworks.org/university/lessons/austrian-business-cycle#commentsConservative University: Why Economics Mattershttp://www.freedomworks.org/content/conservative-university-why-economics-matters
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</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p><strong>Introduction</strong>
While economics might not be the most popular academic discipline, Matt Kibbe, President &amp; CEO of FreedomWorks, makes the case for the importance of studying economics and how it can affect your opportunities in life.</p>
<p><strong>Summary</strong>
* Conservatives promote the ideas of free markets, opportunity, and less government intrusion in the marketplace
* Economics defined is to understand how you and others can coordinate to solve problems
* Austrian School of economic thought has influenced many on the political right, including ideas from F.A. Hayek and Ludwig von Mises</p>
</div></div></div>Wed, 22 Oct 2014 19:56:39 +0000mkibbe60755 at http://www.freedomworks.orghttp://www.freedomworks.org/content/conservative-university-why-economics-matters#comments4 Graphs Bernanke Doesn’t Want You to Seehttp://www.freedomworks.org/content/4-graphs-bernanke-doesn%E2%80%99t-want-you-see
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>We wrote up a “<a href="http://www.freedomworks.org/blog/brianlasorsa/bernanke-announces-qe3-here’s-your-fact-sheet">QE3 Fact Sheet</a>” after Ben Bernanke’s announcement on monetary policy Thursday. Left-wing apologists for the central bank came out in full swing, advocating for the money injection as a beacon of hope.<br><br>For instance, <em>New York Times</em> columnist <a href="http://krugman.blogs.nytimes.com/2012/09/16/how-could-qe-work/">Paul Krugman</a> tells us that quantitative easing will boost the housing market. “It’s good to see the Fed doing more,” he wrote. But, as <em>Washington Post</em> reporter <a href="http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/14/qe3-how-long-before-the-feds-stimulus-helps-the-real-economy-about-six-months/">Brad Plumer</a> explains, it will take about six months for the effects of QE3 to kick in. In other words, they’re saying, we have to print money so that we can find out why.<br><br>Let’s remember — we can’t obtain these short-term “benefits” without experiencing the long-term disaster of turbulent business cycles and a devalued currency. Here are four graphs that we hope will remind voters about the economic realities of central banking.<br><br><strong>Before and After the Housing Bubble</strong></p><p><a href="http://research.stlouisfed.org/fred2/graph/?id=HOUST"><img src="http://d7.freedomworks.org.s3.amazonaws.com/housingsmall.PNG" alt="Housing Bubble" title="Housing Bubble" class="imagecache imagecache-full"></a></p><p>The graph above — obtained from the Federal Reserve Bank of St. Louis — reflects the “before and after” conditions of the mortgage crisis with the blue line specifically depicting the number of new privately owned housing units started. A handful of academics decided during Bush’s first term that the housing sector wasn’t productive enough. Keynesians followed suit and suggested, in Krugman's own words, “Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”<br><br>And that he did.</p><p>A mixture of the Fed’s low interest rates and Congress’s bending-over for Freddie Mac and Fannie Mae was the ignition the housing bubble needed. The sector swelled nearly 50 percent throughout the early 2000s, and Keynesians were happy to see such out-of-the-ordinary risk-taking. However, as Austrian economists warned, the bubble popped, falling back to its point of origin even quicker than it rose and eventually shattering at a low that hadn’t been witnessed in more than 50 years of the Fed’s documentation.</p><p><a href="http://www.census.gov/hhes/www/housing/hvs/historic/index.html"><img src="http://d7.freedomworks.org.s3.amazonaws.com/homeratessmall.PNG" alt="U.S. Homeownership Rate" title="U.S. Homeownership Rate" class="imagecache imagecache-full"></a></p><p>The graph above — obtained from the U.S. Census Bureau — examines national Q1 homeownership rates (as opposed to the previous graph, which refers to the initial construction of these homes). While you can see the boom of stimulus “worked,” the economy was left in shambles by the unavoidable bust. Homeownership rates soared from 67.1 percent in 2000 to 69.1 percent in 2005 only to drop to 65.4 percent in 2012.<br><br>Millions of families — whose net worths were largely invested in their homes — have lost drastic amounts in equity value and would have been much better off without the bubble having taken place at all. The money spent and resources misallocated in order to spur the sector were not, in any which way, worth the outcome.<br><br><strong>How Much Money the Fed Prints</strong></p><p><a href="http://research.stlouisfed.org/fred2/graph/?s%5b1%5d%5bid%5d=AMBNS"><img src="http://d7.freedomworks.org.s3.amazonaws.com/moneysmall.PNG" alt="Monetary Inflation" title="Monetary Inflation" class="imagecache imagecache-full" height="262" width="437"></a><br>The graph above — obtained from the Federal Reserve Bank of St. Louis — measures the adjusted monetary base. The money supply is relatively stable until the late 1930s under Franklin Roosevelt, but it has increased ever since, which means the USD is worth less and less each year. Particularly stunning is the vertical line first appearing in October 2008. This is the money injected for the bank bailout. And it continues skyrocketing due to the stimulus package, the auto bailout, and the current administration’s other surprises.<br><br>Simply stated — the Fed managed to triple our monetary supply in only six years. It’s almost impossible to fathom the effect this will have on prices, especially if American production industries struggle as a result of taxes, regulations, et cetera.<br><br><strong>Gold’s Resistance to Inflation</strong></p><p><a href="http://www.forbes.com/2009/07/08/gold-investment-inflation-forbes-woman-net-worth-jewelry.html"><img src="http://d7.freedomworks.org.s3.amazonaws.com/goldsmall.PNG" alt="Closing Price of Gold" title="Closing Price of Gold" class="imagecache imagecache-full"></a></p><p>The graph above — obtained from <em>Forbes</em> — demonstrates gold’s resistance to economic downturns. Its price fluctuates depending upon supply and demand. However, we’re interested in two points on this graph where the price suddenly climaxes: (1) the 1970s, and (2) the 2000s.<br><br>We discussed the 2000s in our previous graphs. A rough business cycle, crony capitalism, monetary inflation, unnecessary regulations, and looming insecurities all contributed to today’s bleak business environment. Yet, in all its glory, the price of gold exceeded (and still exceeds) everyone’s expectations. Lucky are those who purchased it immediately after the turn of the millennium. Their money certainly was not devalued.<br><br>Not too many young libertarians understand that the 1970s is a direct consequence of the “Nixon Shock.” The 1970s are famous as a period of stagflation (i.e., high inflation, high unemployment, and slow growth). Nixon implemented wage and cost controls in 1971 — which started as a 90-day freeze and ultimately lasted into 1974 — so price inflation reached double-digits. That’s why you see a small climax on the graph around 1974.<br><br>Nixon left office abruptly in August, at which point confidence in the dollar grew slightly, but it wasn’t enough to outweigh the former president’s decision to end convertibility between the dollar and gold. Thus, the latter flourished as the former decayed years later.<br><br><strong>Why These Graphs Matter</strong><br><br><a href="http://www.freedomworks.org/blog/jborowski/united-states-falls-to-18th-most-economically-free">Julie Borowski</a> explained Wednesday that the U.S. fell to the 18th most economically free country. The Federal Reserve is a major reason for this embarrassing decline. Until policymakers realize that we shouldn’t sacrifice long-term prosperity for short-term gains, our freedom rank will continue to drown — and our dollar will, too.</p></div></div></div>Thu, 20 Sep 2012 21:51:36 +0000BrianLaSorsa55603 at http://www.freedomworks.orghttp://www.freedomworks.org/content/4-graphs-bernanke-doesn%E2%80%99t-want-you-see#commentsBernanke Announces QE3: Here’s Your Fact Sheet!http://www.freedomworks.org/content/bernanke-announces-qe3-here%E2%80%99s-your-fact-sheet
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Chairman <a href="http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm">Ben Bernanke</a> made two announcements Thursday about monetary policy: (1) the Federal Reserve will begin its third round of quantitative easing, and (2) it will maintain extremely low interest rates of 0 to 1/4 percent until at least mid-2015. These banking actions may sound like gobbledygook, but their effects on our country’s currency are drastically serious. Let’s translate a few things into layman’s terms.</p> <p><strong>“QE3” — what’s this mean?</strong></p> <p>The acronym refers to an unconventional monetary policy called “quantitative easing,” and the subsequent number refers to the specific round of easing. Yes, this means the Fed has already completed two rounds without success.</p> <p>The stated goal is to stimulate economic growth. At this point the Fed has forced interest rates as low as humanly possible — any lower and lenders would be paying debtors — so the only option left is to create money out of thin air and inject it into the nation’s money supply by purchasing various banks’ financial assets.</p> <p><strong>What will QE3 entail?</strong></p> <p>The Fed will buy $85 billion in assets every month until the end of the year. Its purchases will consist of $40 billion in mortgage-backed securities (essentially mortgage debt) belonging to one of our economy’s most depressed industries.</p> <p>Unlike QE1 and QE2, QE3 is “open-ended.” This gives the Fed unlimited power to extend the year-end deadline. Not only can it continue buying potentially worthless assets “if the outlook for the labor market does not improve substantially,” it admits the practice will probably be used even “after the economic recovery strengthens.”</p> <p>Ultimately the choice to dilute the USD’s purchasing power is left up to Bernanke’s discretion.</p> <p><strong>Can we trust Bernanke’s discretion?</strong></p> <p>Even if QE were a sensible plan, you may ask, how accurate is the Chairman in analyzing economic trends? History’s answer: he’s terribly inaccurate. Let’s hope he doesn’t get into archery. For example, in January 2008, Bernanke explained to reporters, “<a href="http://afp.google.com/article/ALeqM5jg0-uy90_R_Aovq5Aql3C2SQ8x-w">The Federal Reserve is not currently forecasting a recession</a>.” You’ll see in the graph below — obtained from the Bureau of Labor Statistics — that his embarrassing forecast was followed immediately by skyrocketing unemployment.</p><p><a href="http://data.bls.gov/timeseries/LNS14000000"><img src="http://d7.freedomworks.org.s3.amazonaws.com/UNEMPLOYMENT.PNG" alt="Unemployment Rate" title="Unemployment Rate" class="imagecache imagecache-full"></a></p><p>On the other hand, Congressman <a href="http://paul.house.gov/index.php?option=com_content&amp;task=view&amp;id=323&amp;Itemid=6">Ron Paul</a> and investor <a href="http://youtu.be/2I0QN-FYkpw">Peter Schiff</a> were predicting the housing crisis-fueled recession all the way back in the early 2000s. So I’m a little wary of Bernanke’s ability to properly understand the business cycle, let alone of giving him the tools that cause the cycles.</p> <p><strong>What effects will we see?</strong></p> <p>The balance sheet below — obtained from the Federal Reserve Bank of Cleveland — is a summary view of the central bank’s holdings. You can click the image to view the full-sized chart, or you can check out the <a href="http://blogs.wsj.com/economics/2012/09/13/a-look-inside-the-feds-balance-sheet-15/tab/interactive/">Wall Street Journal</a>’s interactive graphic featuring the same numbers.</p><p><a href="http://www.clevelandfed.org/research/data/credit_easing/index.cfm"><img src="http://d7.freedomworks.org.s3.amazonaws.com/BALANCESHEET.PNG" alt="Federal Reserve Balance Sheet" title="Federal Reserve Balance Sheet" class="imagecache imagecache-full" height="247" width="446"></a></p><p>The amount of mortgage-backed securities is so worrisome because these assets are unstable and don’t disappear after the Fed’s purchase. The securities still exist and have to be released back into the economy at some point in the future. By temporarily flushing them out of the public’s view, the Fed is misleading certain investors and leaving other ones bearish. The release of these securities will be met with the realization that important resources are severely misallocated.</p> <p>The immediate effects are more straight-forward.</p> <p>Expect a strong boost to the stock market. The Fed begins purchasing assets today, and that means Wall Street investors who own mortgage-backed securities will have liquid portfolios to spend on other stocks. Typically zero percent interest rates signal you’ll want to invest in industries like banking and housing for a short time while the bubble grows, but, since interest rates are already zero bound, the situation is stickier.</p> <p>Currency dilution also signals that gold and silver prices will increase. They’ll be used as a hedge against the impending price inflation. Any metal with intrinsic value — the currency advocated by Austrian School founder Carl Menger — will likely follow this pattern.</p> <p>The details about how QE affects the rich and poor will have to wait for a future blog post. I’ll also explain the relationship between currency strength and the central bank, as well as what that relationship means for our country’s economy. In the end, policymakers will have to choose between two options: (1) monetize the debt through inflation as it’s doing now, or (2) get America back on the path to fiscal conservatism and sound, constitutional money.</p> <p><strong>What do we do now?</strong></p> <p>The "<a href="http://www.freedomworks.org/blog/jborowski/audit-the-fed-passes-house">Audit the Fed</a>" bill easily passed the&nbsp;House with a&nbsp;327-98 vote in July. Only one Republican — Bob Turner&nbsp;of&nbsp;New York&nbsp;— voted "nay."</p> <p>Senate Majority Leader <a href="http://www.freedomworks.org/blog/jborowski/demand-harry-reid-bring-audit-the-fed-bill-to-a-vo">Harry Reid</a>&nbsp;is currently blocking the bill from a vote in the upper chamber.&nbsp;Matt Kibbe, President and CEO of FreedomWorks, has written a letter to the Senate urging "yea" votes on Senator&nbsp;<a href="http://www.freedomworks.org/publications/letter-to-senate-cosponsor-rand-pauls-audit-the-fe">Rand Paul</a>'s supplement, S. 202.</p> <p>Join us in our fight for monetary accountability by <a href="http://www.senate.gov/general/contact_information/senators_cfm.cfm">contacting</a> your senators and telling them to support&nbsp;an audit of the central bank.&nbsp;You can also share Congressman Ron Paul’s <a href="http://paul.house.gov/images/stories/Audit_the_Fed_FAQ.pdf">FAQ</a> sheet with your friends and family for more information on why this action is important.</p></div></div></div>Fri, 14 Sep 2012 18:00:42 +0000BrianLaSorsa55614 at http://www.freedomworks.orghttp://www.freedomworks.org/content/bernanke-announces-qe3-here%E2%80%99s-your-fact-sheet#commentsA Clue to a Clueless Presidenthttp://www.freedomworks.org/content/clue-clueless-president
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Barack Obama is not merely uninformed on economics, he is enthusiastically misinformed. He says he keeps trying to fix the economic mess he "inherited", but nothing he does works. &nbsp;</p> <blockquote class="twitter-tweet tw-align-left"><p>There has been absolutely nothing in @<a href="https://twitter.com/BarackObama">BarackObama</a>'s performance to date that suggests he can improve the economy if given 4 more years. Zip.</p>— Brad Thor (<a href="https://twitter.com/BradThor/status/212878418172321793">@BradThor</a>)</blockquote> <p>The proof, as they say, is in the pudding. No matter how much a politician likes to proclaim his skill and wisdom -- and Barack Obama likes it as few others -- eventually the effects of his policies on the real world are what matter. Barack Obama has not done what he said he would do, because he can't.</p><p></p><p>There are many reasons why Barack Obama can't fix the economy, and in particular, why he, as President with his particular set of skills and policy preferences, can't "create jobs" in the private sector.</p><p>First, no one can "fix the economy". We can and do demand that our government stop breaking it.</p><p>Government does not set up the system for the private sector to follow, government enforces the system people in their society create.&nbsp;The economic system is not a product of government, but the natural outcome of people interacting. They trade, develop customs, and eventually need a way to defend the rights of the weak against the strong and the unprincipled. &nbsp;</p><p>We now have gone so far beyond that situation that the government picks winners and losers, owns companies, and even<a href="http://www.cnbc.com/id/47205997/Economy_s_Biggest_Drag_Right_Now_Is_Government"> counts itself as part of the economy</a>. Its heavy hands are around the throats of people trying to make a living, from small contractors to corporate giants.&nbsp;</p><p>But more specifically,&nbsp;Mr. Obama can't increase employment and "create jobs" because he tries to do that directly. It doesn't work that way.&nbsp;</p><p>Private sector employers hire people to do work the employers have, but don't have enough manpower to get done. &nbsp;They don't hire people as charity, or in response to <a href="http://www.whitehouse.gov/blog/2012/05/21/small-business-hiring-credit-womens-health-week-and-strengthening-vawa-deputies-down">tax credits</a>, or to help the President's numbers look good for reelection. To do anything else is to be out of business.</p><p>The key clue to Obama's <a href="http://townhall.com/columnists/larryelder/2012/06/14/economy_obama_brags_about_treading_water">cluelessness</a> is the phrase the White House has used for months, "jobs created or saved". &nbsp;When introduced, the phrase <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&amp;sid=aUuHhaDx8Hr8">was its own punch line</a>, since there is no way to measure how many jobs a program has saved. &nbsp;Yet the administration continues to use it.</p><p>The phrase also reveals the incurable problem with Keynesian economics. A recession is not caused by a lack of "aggregate demand". A recession is caused by misaligned capital and labor. Trying to save jobs or bail out failing companies extends the conditions leading to the recession, making recovery impossible.</p><p>When bubbles happen, capital is flowing into the wrong areas. Whether it's tulips, Internet stocks, or real estate, people don't know they're putting their money in the wrong spot, but they are. Because the value of a good or service is whatever someone will pay for it, people investing in the bubble see prices going up and assume they will always go up. Or at least, most investors assume they can sell at the top.&nbsp;</p><p>People suddenly realize that the value of a tulip or that dotcom stock is not what they thought, and try to sell. The perceived value of the item plummets.</p><p>The same thing happens in the market for labor. People with particular skills are sought after and their value rises relative to others. A mania can develop, in which companies believe they need better social media marketing, or Cloud Computing IT staff, or whatever the hot item is. &nbsp;As people rush to acquire those skills, the market can become glutted, and a pool forms of people with the unmarketable skills.&nbsp;&nbsp;</p><p>Bubbles in entire industries have the same effect on labor. But there are also what I call <em>complacency bubbles</em>, in which technological advances or societal changes cause demand for a product in use for decades or even centuries to dry up, often seemingly overnight.</p><p>It is senseless to try to save jobs or even entire industries that produce things no one wants. If those jobs are useful, they'll save themselves.</p><p>If the jobs aren't useful, government subsidy serves to prolong the conditions that led to the bubble, or to keep the people in question from facing the reality of their situation. Instead of liquidating their failed, outdated business, a government subsidy allows them to maintain the fiction that they are profitable.</p><p>That applies in all areas of the economy, from bailing out companies and propping up bad mortgages to farm subsidies. Eventually, the mistake someone is making in trying to be in a business or to have an investment that cannot profit on its own will trickle up to the taxpayers.</p><p>We have tried it Barack Obama's <a href="//www.youtube.com/embed/UGTJZoZBTJc&quot; frameborder=&quot;0&quot; allowfullscreen&gt;&lt;/iframe&gt;">self-serving Keynesian way</a>. It's time to get government out of the way and see what happens when free people are allowed to compete.</p></div></div></div>Tue, 19 Jun 2012 14:17:08 +0000lheal55397 at http://www.freedomworks.orghttp://www.freedomworks.org/content/clue-clueless-president#commentsMeet the Austrians Part 1: St. Thomas Aquinashttp://www.freedomworks.org/content/meet-austrians-part-1-st-thomas-aquinas
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p></p><p>The Austrian school of economic thought has made a prominent comeback and has risen to a newfound popularity in our political discourse today. However, but has one ever wondered where did this school come from? What are its origins? Who are the founders of this magnificent school of economic thought? This blog series "Meet the Austrians" will highlight those who contributed, and what their contributions to the Austrian School were. </p><br /><p><img class="imagecache imagecache-full" title="http://www.oceansbridge.com/paintings/collections/92-saints/big/Botticelli_(Attributed_to)_1481_1482_XX_St._Thomas_Aquinas_(St._" style="FLOAT: right" height="296" alt="http://www.oceansbridge.com/paintings/collections/92-saints/big/Botticelli_(Attributed_to)_1481_1482_XX_St._Thomas_Aquinas_(St._" src="http://d7.freedomworks.org.s3.amazonaws.com/Botticelli_Attributed_to_1481_1482_XX_St._Thomas_Aquinas_St._Thomas_Aquinas1.jpg" width="195" /><a href="http://mises.org/daily/3920">Some argue</a> that the Austrian school has its roots back to the thirteenth century, with the teachings of <a href="http://plato.stanford.edu/entries/aquinas/">St. Thomas Aquinas (1225-1274).</a> Thomas was born at Roccasecca, which is an area half way between Rome and Naples. He started receiving education at the age of five at the Benedictine abbey of Montecassino. Later Thomas transferred to the University of Naples in order to escape the battle that was to take place at the abbey. While at Naples, Thomas learned about the teachings of Aristotle and was introduced to the Order of Preachers, which at the time was a recently founded mendicant order. Later at the age of 17 Thomas joined the Dominican order, and studied in Cologne and at Paris under the tutelage of Albert the Great. After completing his studies he took his doctorate at the University of Paris, and later taught there and at a number of universities in Europe. </p><br /><p>Throughout his life Thomas was a prolific writer; however, his most famous works was <em>Summa Theologica</em>. In which, Aquinas argues in favor of private property, and that the role of the state is to prevent theft, force and fraud in economic transactions. In this work, Aquinas also made the argument that prices should be set by the market, and brings up that prices will fluctuate due to the supply and demand of a particular product. Thomas was very much in favor of merchants, and as a result of his work in <em>Summa Theologica </em>he helped shift the negative view of mercantile trade.</p><br /><p>How Thomas viewed economic thought is due largely to his perception of natural law. Aquinas believed that since God created everything, God had a plan for everything. Thus an unlawful act inhibits God’s plan from occurring. Economic transactions, he argues are to be placed in this framework, since capital is provided to them by nature and used to reach a certain end. </p><br /><p><a href="http://www.acton.org/pub/religion-liberty/volume-8-number-4/saint-thomas-aquinas">Saint Thomas Aquinas</a> has earned the label of being a proto-Austrian due to the number of contributions he made to the later to come Austrian school of economics. Thomas supported the ownership of private property, argued that the price of goods are to be set by the laws of supply and demand, supported small businesses, and argued for a very limited role of the state. All of which are trademarks of the Austrian school.</p>
</div></div></div>Tue, 21 Jun 2011 17:36:23 +0000twilliams54889 at http://www.freedomworks.orghttp://www.freedomworks.org/content/meet-austrians-part-1-st-thomas-aquinas#commentsGeithner Should Read Miseshttp://www.freedomworks.org/content/geithner-should-read-mises
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>In <a href="http://www.chron.com/disp/story.mpl/business/6255779.html" target="_blank">his speech on the new bailout strategy</a> yesterday, Treasury Secretary Geithner stressed the complexity of the current situation in our financial markets. Later in his <a href="http://www.reuters.com/article/GCA-Housing/idUSTRE51974P20090210" target="_blank">testimony before the Senate</a>, he said he hadn’t heard any good ideas yet on how to value assets without market prices, which is a critical part of his plan to purchase bad assets from banks. He’s right about how complex the market in securities is – or any large market in any good for that matter, but he fails to take the next logical step to conclude that price calculation without a market is impossible.</p> <p class="MsoNormal">The famous <a href="http://en.wikipedia.org/wiki/Economic_calculation_problem" target="_blank">socialist calculation debate</a> of the middle part of the last century that took place over many years in the economics journals was a discussion over the very problem that the Secretary faces. Austrian economists Ludwig von Mises and F.A. Hayek argued that economic calculation absent a market economy was impossible. </p> <p class="MsoNormal">Virtually anything in the world <em>could</em> have an effect on prices for any given buyer. They come about in a market economy by individuals demonstrating their willingness to pay for goods and services. The interplay between supply and demand over time <a href="http://www.amazon.com/Competition-Entrepreneurship-Israel-M-Kirzner/dp/0226437760" target="_blank">tends toward a market clearing price</a> that tends to satisfy more and more consumers and producers over time. The calculation of the “right” price is impossible without the interplay of supply and demand that will be absent under Geithner’s plan. Even if he mixes private and public capital together into a bad asset-buying fund, the government will still distort the prices away from what they would have been in a market economy.</p> <p class="MsoNormal">There is no way for him to accurately calculate a price that the market might have paid for these assets. He understands how complex the system is, but doesn’t take the next step to conclude that such a calculation is impossible. He should be reading <a href="http://mises.org/econcalc.asp" target="_blank">Mises</a> and <a href="http://www.econlib.org/library/Essays/hykKnw1.html" target="_blank">Hayek</a> to understand that the problem he faces has no solution.</p> <p> </p></div></div></div>Wed, 11 Feb 2009 14:14:08 +0000admin53725 at http://www.freedomworks.orghttp://www.freedomworks.org/content/geithner-should-read-mises#commentsTelegraph: Financial crisis shows why we should admire Freidrich Hayekhttp://www.freedomworks.org/content/telegraph-financial-crisis-shows-why-we-should-admire-freidrich-hayek
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Professor Philip Booth, from the London-based <a href="http://www.iea.org.uk/" target="_blank">Institute of Economic Affairs</a> (IEA), had a great post on yesterday's <a href="http://blogs.telegraph.co.uk/philip_booth/blog/2009/01/21/financial_crisis_shows_why_we_should_admire_freidrich_hayek" target="_blank">Daily Telegraph blog</a> (UK), discussing why the latest economic crash strongly supports the arguments made by <a href="http://en.wikipedia.org/wiki/Friedrich_Hayek" target="_blank">Freidrich Hayek</a> and other <a href="http://en.wikipedia.org/wiki/Austrian_School" target="_blank">Austrian economists</a> regarding the regulation of markets. From <a href="http://blogs.telegraph.co.uk/philip_booth/blog/2009/01/21/financial_crisis_shows_why_we_should_admire_freidrich_hayek" target="_blank">the article</a>:</p><blockquote>The crash gives many more indications that Freidrich Hayek was right. Hayek argues that unregulated markets develop institutions that ensure that trust and reputation become valuable commodities. But who cares about trust and reputation when we believe that everything will be looked after by the regulators or by deposit insurance? As far as a company is concerned, compliance with regulation has become more important than trust. The market has been allowed to generate crude economic efficiency, but trust has been crowded out by regulation.</blockquote><p>Now a random Hayek quote for closing:</p><blockquote><p>'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded.</p> <p>~ F.A. Hayek, <em><a href="http://www.amazon.com/exec/obidos/ASIN/0226320901/lewrockwell/">Law, Legislation and Liberty</a>, </em>vol. 3, p 124</p></blockquote></div></div></div>Thu, 22 Jan 2009 22:02:37 +0000admin53712 at http://www.freedomworks.orghttp://www.freedomworks.org/content/telegraph-financial-crisis-shows-why-we-should-admire-freidrich-hayek#comments